Deciding on investing in a granny flat or aged care is one of the most important decisions we can make concerning the welfare of our elderly parents. While we should not compromise on their care, financial decisions also need to be weighed up as to how it will impact on the individual and the extended family over the long term.

Aged care may be the perfect solution where a person has high care and complex needs, or does not have family or social networks and connections available to them. This does come at a cost and while every individual’s situation and financial circumstances are different, if eligible for aged care, you will need to consider the following costs:

a basic daily fee.
basic daily fee and accommodation costs.
basic daily fee and a means tested care fee and accommodation costs.

The basic daily fee cost is a government set fixed rate which covers costs such as meals, utilities, cleaning, laundry and applies to all residents. This rate is currently set at $52.25 per day, $19,071.25 per year. https://www.myagedcare.gov.au/aged-care-home-costs-and-fees

A means tested care fee will vary between $0 to $252.20 per day and is determined through an income and assets assessment. This covers the costs of personal and clinical care such as bathing, dressing, toileting and nursing costs such as administering medication and catheter care. This cost is capped annually and over a lifetime.

Individuals may also be required to pay for the room (accommodation costs) and is also determined by an income and assets assessment. Currently the income is published as below: https://www.myagedcare.gov.au/aged-care-home-costs-and-fees

Where self-funded, an accommodation payment is quoted by each service provider as a lump sum which comprises of payment options including a refundable accommodation deposit (RAD), an equivalent rental daily fee (daily accommodation payment-DAP), or a combination of both. Any unused amount paid as a lump sum (RAD) is refundable when the individual leaves the home.

There are calculators available to assist with determining these fees and accommodation costs and each service provider is obligated to publish the maximum costs on their website. Individuals may be able to negotiate lower rates than that published or may qualify for government concessions.

According to the website https://www.yourlifechoices.com.au/aged-care/cost-of-aged-care an average accommodation payment is just under $400,000. Our local aged care refundable $410,000.

In comparison, a typical quality designed and constructed granny flat or 2nd dwelling (not a cheap prefabricated 2nd dwelling) in Australia for a 1-2 bedroom home would cost approximately $150,000-200,000 to construct. These can be designed for wheelchair access, mobility and other safety features as well as designed to minimise utility expenses.

A granny flat is an arrangement that secures the person the right to live in a property for the rest of that person’s life. The granny flat right is dependent on the granny flat interest, for example the investment the individual has provided to secure the right to live in the home, or 2nd dwelling. There are additional rules for payment transfers to the homeowner over the cost of construction.

This option may be a better housing solution to suit the elderly family member who is still able to maintain some independence and where the family are able to provide the support, care and companionship needs by being close by. The individual’s health and well-being should be monitored and if required, their personal and medical needs may need to be re-evaluated for home care services and other medical services.

Some of the benefits of a granny flat for the elderly include:

Less risk in exposure to others. COV19 has seen visitors restricted to protect the welfare of others – if residing in a granny flat, they can maintain social distancing while still having connection with loved ones.
A granny flat that is designed to meet the needs of semi-independent individuals may reduce the financial burden and leave more funds for the person to enjoy a better lifestyle and income for a longer period.
May promote better mental well-being if the individual has emotional, physical, and social support.
The federal government has just announced in the federal budget this month a huge investment into home care packages. https://communitycarereview.com.au/2020/10/06/budget-delivers-massive-investment-in-home-care/

Keep in mind that you may still need to transfer your elderly parent into aged care later depending on their health status.

Benefits for the homeowner:

May increase property value and depending on the laws in your state can be used in the future for additional rental income.
Peace of mind. Being able to care for your parent to your standards and have more involvement and control over their care such as ensuring they have access to healthy food, maintaining medical appointments, assisting with daily activities.

Baahouse have a developed a range of pre-designed granny flat (2nd dwelling) homes that comply with the Australian building code standards for access and mobility while not compromising on aesthetics or quality materials. These are designed by architects and feature:

Stunning and spacious architectural designs with options for 1,2,3 & 4 bedrooms.
Flexible, multipurpose design options perfect for a Granny Flat, Home Office, Rural Retreat and more.
High raked ceilings to living and deck areas that not only increase aesthetic, but maximise light, space, and comfort.
Sustainable sourced timber construction adds texture and warmth.
Multiple options for eco materials and finishes.
Designed and orientated to capture solar access and prevailing breezes, ensuring your BAAHOUSE is warm in winter and cool in summer – perfect for the Australian climate
Fits on standard 600sqm lot without council approval (1 & 2 Bedroom only).

Other pre-designs can be modified for wheelchair access and mobility. https://www.baahouse.com.au/work

Our team also provide custom architectural design services to ensure any addition to your property whether a 2nd dwelling or renovation can seamlessly tie in with your existing home and structures.

Both housing solutions for the elderly require careful planning and consultation with all parties including extended family members and health care providers. As always in making important financial decisions, seek independent financial and legal advice.

Pre-designed Lincoln design https://www.baahouse.com.au/lincoln2b_s100sqm